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With little precedent, cost of wind power up in the air

The main point of contention in the contract talks between National Grid and Deepwater Wind is the price of electricity generated by the proposed wind farm off Block Island. Deepwater has quoted a price of between 20 and 25 cents per kilowatt-hour. National Grid has calculated the cost, with adjustments over time, to be closer to 30.7 cents per kilowatt hour. Either price is much higher than the 9.2 cents per kilowatt-hour that National Grid pays for power mainly from natural gas plants. So far, the utility has refused to pay the higher cost for wind energy, saying it's simply too much.

PROVIDENCE - The main point of contention in the contract talks between National Grid and Deepwater Wind is the price of electricity generated by the proposed wind farm off Block Island.

Deepwater has quoted a price of between 20 and 25 cents per kilowatt-hour. National Grid has calculated the cost, with adjustments over time, to be closer to 30.7 cents per kilowatt hour. Either price is much higher than the 9.2 cents per kilowatt-hour that National Grid pays for power mainly from natural gas plants. So far, the utility has refused to pay the higher cost for wind energy, saying it's simply too much.

But William M. Moore, Deepwater's chief executive officer, said National Grid has no basis to assess Deepwater's price, because there are currently no offshore wind farms in the United States. Comparing the cost of green energy, with its added environmental benefits, to energy generated by polluting fossil fuels doesn't make sense, he said.

But Deepwater is not the first offshore wind developer to negotiate a power purchase agreement. In fact, last year, Bluewater Wind, a company that proposes building a wind farm with up to 70 turbines off the coast of Delaware,... more [truncated due to possible copyright]  

PROVIDENCE - The main point of contention in the contract talks between National Grid and Deepwater Wind is the price of electricity generated by the proposed wind farm off Block Island.

Deepwater has quoted a price of between 20 and 25 cents per kilowatt-hour. National Grid has calculated the cost, with adjustments over time, to be closer to 30.7 cents per kilowatt hour. Either price is much higher than the 9.2 cents per kilowatt-hour that National Grid pays for power mainly from natural gas plants. So far, the utility has refused to pay the higher cost for wind energy, saying it's simply too much.

But William M. Moore, Deepwater's chief executive officer, said National Grid has no basis to assess Deepwater's price, because there are currently no offshore wind farms in the United States. Comparing the cost of green energy, with its added environmental benefits, to energy generated by polluting fossil fuels doesn't make sense, he said.

But Deepwater is not the first offshore wind developer to negotiate a power purchase agreement. In fact, last year, Bluewater Wind, a company that proposes building a wind farm with up to 70 turbines off the coast of Delaware, signed a contract with Delmarva Power, that state's electric utility. The price agreed to in that contract is 12 cents per kilowatt-hour.

Moore said Bluewater's pricing is not "viable" and as evidence pointed to the company's struggles to attract financing since its main backer, Babcock and Brown, of Australia, went into bankruptcy. However, Rob Propes, Bluewater's project manager in Delaware, said the price is realistic and that a new investor should be announced soon.

"Not only is it a viable contract, it is allowing us to identify investors to replace Babcock and Brown," he said.

The company behind the Cape Wind project in Massachusetts - the only other offshore project to have progressed significantly - has not released any information on a potential price for power generated by the 130 turbines it proposes installing in Nantucket Sound.

"It's going to have to be competitive and a good value over the long term," said Mark Rodgers, a spokesman for Energy Management Inc., which has not signed a power purchase agreement with a utility.

Moore, of Deepwater, said that without a precedent it's hard to determine the price of offshore wind. His company plans to continue negotiations with National Grid.


Source: http://www.projo.com/news/c...

OCT 17 2009
http://www.windaction.org/posts/22699-with-little-precedent-cost-of-wind-power-up-in-the-air
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